01—Abstract
Summary
Summary of the 8-K filed June 13, 2024. Cited figures are marked; the original filing is the authoritative source.
On June 9, 2024, AIG waived its right to nominate a majority of the candidates on Corebridge Financial's board slates and, after a board designee resigned, lost its controlling interest in Corebridge.
AIG deconsolidated Corebridge, its Life and Retirement holding company, and now holds a 48.4%a retained stake. Historical Corebridge results will be presented as discontinued operations starting with the Q2 2024 Form 10-Q. AIG will account for the stake under the fair value option, treating it as an equity method investment valued at Corebridge's share price.
Dividends and share price changes will flow through net investment income, so AIG's reported earnings will become more sensitive to Corebridge's market value. The filing's unaudited pro forma statements, prepared under Article 11 of Regulation S-X, show the scale of the change. As of March 31, 2024, pro forma total assets fall from $544.1 billion as reported to $168.3 billionb, and pro forma total equity falls from $49.1 billion to $46.2 billion.
Pro forma revenues for 2023 fall from $46.8 billion to $26.6 billionc, largely because Corebridge's premiums and investment income are removed. Pro forma diluted EPS from continuing operations is $5.04 for 2023 versus $4.98 as reported, and $3.44 for Q1 2024 versus $1.74 as reported. These figures are illustrative and exclude the pending Nippon Life transaction.
AIG has also announced a pending sale of about 20% of Corebridge's outstanding common stock (121,956,256 shares) to Nippon Life Insurance Company at $31.47d per share, for about $3.8 billion in cash. Closing is expected in Q1 2025 and depends on regulatory approvals.
The May 30, 2024 sale of roughly 5% of Corebridge for $876 million is already reflected in the pro forma statements. The Nippon transaction is not, so the pro forma figures will change once it closes.
02—Key points
Key Highlights
- AIG lost its controlling interest in Corebridge Financial on June 9, 2024, after waiving its board nomination majority right and after a designee resigned, and it will no longer consolidate Corebridge.
- AIG retains a 48.4% stake in Corebridge, which will be carried at fair value as an equity method investment using Corebridge's stock price.
- Corebridge results will be reported as discontinued operations beginning with the Q2 2024 Form 10-Q, which will substantially change AIG's reported revenue and asset base.
- Pro forma total assets as of March 31, 2024 would be about $168.3 billion versus $544.1 billion as reported; pro forma total equity would be about $46.2 billion versus $49.1 billion.
- A pending sale of about 20% of Corebridge to Nippon Life for approximately $3.8 billion ($31.47 per share) is expected to close in Q1 2025, subject to regulatory approvals, and is not reflected in the pro forma statements.
- The May 30, 2024 sale of about 5% of Corebridge for $876 million is reflected in the pro forma statements and will be recorded in AIG shareholders' equity in Q2 2024.
- Pro forma diluted EPS from continuing operations is $5.04 for 2023 (vs. $4.98 reported) and $3.44 for Q1 2024 (vs. $1.74 reported), reflecting Corebridge's fair value changes and dividends now recorded as investment income.
03—Questions
Frequently Asked Questions
Why did AIG stop consolidating Corebridge?
AIG waived its contractual right under the Separation Agreement to nominate a majority of the candidates on Corebridge's board slates. After a designee on Corebridge's board resigned, AIG no longer held a controlling interest, so it deconsolidated Corebridge effective June 9, 2024.
How will AIG's financial statements change after deconsolidation?
Corebridge's historical results will be shown as discontinued operations. AIG's remaining stake will be an equity method investment carried at fair value based on Corebridge's stock price. Dividends and stock price changes will be recorded in net investment income, which makes reported earnings more sensitive to Corebridge's share price. The filing's pro forma tables show revenues and total assets falling sharply on a deconsolidated basis.
What is the Nippon Life transaction and when is it expected to close?
AIG agreed to sell 121,956,256 Corebridge shares, about 20% of outstanding common stock at signing, to Nippon Life Insurance Company for about $3.8 billion in cash ($31.47 per share). Closing is expected in Q1 2025, subject to closing conditions including regulatory approvals. The transaction has not been completed and is not reflected in the pro forma financial statements.
How much did AIG receive from its earlier Corebridge share sale, and how is it accounted for?
AIG sold about 5% of Corebridge (roughly 30 million shares) on May 30, 2024 in an underwritten public offering for $876 million. The proceeds will be recorded in AIG shareholders' equity in Q2 2024, and the pro forma statements already reflect the sale.
Do the pro forma figures show AIG's actual future results?
No. The pro forma statements are unaudited, illustrative, and based on management's best estimates under Article 11 of Regulation S-X. They are not intended to show what results would have been, or will be, after the Separation. They assume the separation occurred on January 1, 2023 (for income statements) and March 31, 2024 (for the balance sheet), and they will differ from the discontinued operations presentation in AIG's Q2 2024 Form 10-Q and later filings.
04—Continue